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DEFINITION of 'Stock ETF'

A security that tracks a particular set of equities, similar to an index. A stock ETF is traded just as a normal share of stock is traded on an exchange, but unlike a mutual fund it will have its price adjusted throughout the day rather than at market close. This type of ETF is usually made up of stocks in a similar industry, such as energy, but can cover an index of equities as well.

BREAKING DOWN 'Stock ETF'

A stock ETF allows an investor to gain exposure to a basket of equities without having to purchase individual shares. A stock ETF can be treated like a normal stock in that it can be shorted or purchased on margin. Like most ETFs, a stock ETF often carries a management fee or other type of expense, but this is typically lower than those found in a mutual fund.

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